In the face of a downturn in demand, prompted by heightened borrowing costs and elevated repair expenses for vehicles, United States-based electric vehicle startups are shifting gears towards more affordable models. According to a recent article by Reuters, these companies are decelerating their production acceleration efforts and are streamlining their workforce to better navigate the current market dynamics.
Fisker has voiced concerns about its sustainability this month, indicating a need to reduce its workforce by 15% and to halt spending on forthcoming ventures until it establishes a partnership with a manufacturing entity. Discussions with Nissan are progressing, which could potentially offer Fisker a significant financial boost and provide Nissan access to an electric vehicle truck. Despite producing over 10,000 of its Ocean electric SUVs in 2023, Fisker's deliveries hovered around 4,700. The company concluded the year with $325.5 million in cash and equivalents, a decline from $527.4 million at the end of the third quarter.
Lucid Group, with the Saudi Arabian Public Investment Fund as its principal investor, holding more than a 60% stake, has also set its annual production forecasts considerably below expectations as part of its cost-management strategy. Despite not meeting revenue expectations for six consecutive quarters, Lucid reduced the price of its Lucid Air Pure and now includes two years of complimentary scheduled maintenance and a charging allowance. November saw the unveiling of its Gravity SUV, slated for late-year production start. Lucid aims to commence production of a competitively priced midsize vehicle by late 2026, in a bid to compete with Tesla’s Model 3 and Model Y. Lucid wrapped up the fourth quarter of 2023 with $1.369 billion in cash and equivalents.
Nikola is making a strategic pivot towards hydrogen-powered big rigs following incidents where some of its battery-electric trucks were involved in fires last August, prompting a recall. The company is targeting $170 million in truck revenue for 2024, with aspirations to sell 450 units, including its hydrogen fuel cell electric trucks. At the end of December, Nikola reported a cash balance of $464.7 million, marking its most significant unrestricted cash reserve since the fourth quarter of 2021.
Rivian Automotive announced its new, more affordably priced electric R2 SUVs and R3 crossovers on Thursday, with production plans for the R2 at its U.S. facility aimed at accelerating deliveries by the first half of 2026. This announcement followed a weeks-long production halt earlier in the year for factory upgrades and cost reductions. Rivian has adjusted its production forecast for 2024 to 57,000 vehicles, significantly below the anticipated 81,700 units, and markedly lower than Tesla's 1.8 million vehicle deliveries in 2023. In a bid to attract more customers, Rivian introduced lower-range, more cost-effective options for its existing models in February. Efforts to minimize cash burn have included renegotiating supply contracts and internalizing some component production. As of the end of the fourth quarter of 2023, Rivian reported having $9.37 billion in cash and short-term investments.
Tesla is setting the stage for the production of a new, more affordable mass-market product by mid-2025, as well as growing its charging network. This strategic move is aimed at bolstering its competitiveness against lower-priced gasoline vehicles and cost-effective electric vehicles from China.
Each of these startups is maneuvering through the challenges of a weakened demand environment with strategic adjustments aimed at sustaining their operations and ensuring their competitive stance in the evolving electric vehicle market.
